Fine wine
A market of a few thousand serious participants, priced in cases of twelve, settled in bonded warehouses, and quoted almost entirely gross of cost. It has had a boom and a twenty-four percent correction inside four years and almost nobody outside the trade noticed either.
Richard Thaler tells the story in Misbehaving of a wine-loving economist who buys a case cheap, watches it multiply, drinks it, and books the pleasure at zero, because the money left his account years ago. That is mental accounting, and it is the reason this page is a calculator rather than a chart.
Bonded storage runs roughly ten to fifteen pounds per case per year, insurance around a quarter of a percent of value, and an auction house or broker takes ten percent or more off the top. Put a real holding through it and see how much of the headline number survives.
Lafite at the 2019 classification average, held a decade, sold flat
What the brochure says
0.0%
per year, gross · £0 total
What you keep
-1.6%
per year, net · -£951 total
If you drink it instead
£541
what you paid, per bottle
£487
what it costs you tonight, per bottle
The second number is what a buyer would have handed you, net of commission, for a bottle you are about to open. The money left your account years ago, so the cork feels free; the opportunity cost is the real price of the evening. Thaler calls the gap mental accounting. His friend the wine economist called it a very good deal.
Insurance accrues on the average of entry and exit value, the honest simplification for a straight-line assumption. Not modelled: the bid-ask spread, duty and VAT if the case leaves bond, provenance risk, and the chance that the bottle you finally open is corked.